Q1(a)Break-even analysis, Margin of Safety
5 marks medium
A company gives the following information: Margin of Safety Rs.7,50,000, Total Cost Rs.7,75,000, Margin of Safety (Qty.) 15,000 units, Break Even Sales in Units 5,000 units. You are required to CALCULATE:
Q1(b)Fixed overhead variances
5 marks medium
ZX Ltd. has furnished the following information: Budgeted working days 25, production 20,000 units, fixed overheads Rs. 3,00,000. Actual March 2020: working days 27, production 22,000 units, fixed overheads Rs. 3,10,000. Budgeted fixed overhead rate is Rs. 10.00 per hour. Actual hours worked in March 2020 were 31,500. In relation to fixed overheads, CALCULATE:
Q1(c)Wage schemes, piece rate, bonus calculations
5 marks medium
A company is undecided as to what kind of wage scheme should be introduced. The following particulars have been compiled in respect of three workers:
Worker I: Actual hours 380, Hourly rate Rs.40, Product A 210 units, Product B 360 units, Product C 460 units
Worker II: Actual hours 100, Hourly rate Rs.50, Product C 250 units
Worker III: Actual hours 540, Hourly rate Rs.60, Product A 600 units, Product B 1350 units
Standard time allowed per unit: Product A 15 minutes, Product B 20 minutes, Product C 30 minutes. For piece rate, each minute is valued at Rs. 1/-
You are required to COMPUTE the wages of each worker under:
Q1(d)Overhead absorption rates, fixed and variable overheads
5 marks medium
A Ltd has calculated a predetermined overhead rate of Rs.22 per machine hour for its Quality Check (QC) department. The following overhead expenditures at various activity levels had been estimated: Rs.3,38,875 at 14,500 machine hours; Rs.3,47,625 at 15,500 machine hours; Rs.3,56,375 at 16,500 machine hours. You are required to:
Q2(a)Activity-based costing (ABC)
10 marks hard
ZA Ltd. is a manufacturer with the following cost structure per unit: Product A (Direct Materials Rs.100, Direct Labour Rs.30, Production Overheads Rs.30, Quantity 20,000 units); Product B (Direct Materials Rs.80, Direct Labour Rs.40, Production Overheads Rs.40, Quantity 40,000 units); Product C (Direct Materials Rs.80, Direct Labour Rs.50, Production Overheads Rs.50, Quantity 60,000 units). The company was absorbing overheads on direct labour hours basis. A management accountant has suggested ABC system with cost pools: Stores Receiving (Cost Rs.5,92,000, Driver: Purchase Requisitions); Inspection (Cost Rs.17,88,000, Driver: Production Runs); Dispatch (Cost Rs.4,20,000, Driver: Orders Executed); Machine Setup (Cost Rs.24,00,000, Driver: Number of Setups). Details: Product A (360 Setups, 180 Orders, 750 Runs, 300 Requisitions); Product B (390 Setups, 270 Orders, 1,050 Runs, 450 Requisitions); Product C (450 Setups, 300 Orders, 1,200 Runs, 500 Requisitions). Required: CALCULATE activity based production cost of all three products.
Q2(b)Cost accounting statements
10 marks hard
Following figures have been extracted from the books of M/s A&R Brothers: Opening stock (1st March 2020): Raw materials Rs.6,06,000, Finished goods Rs.3,59,000. Closing stock (31st March 2020): Raw materials Rs.7,50,000, Finished goods Rs.3,09,000. Work-in-process: 1st March Rs.12,56,000, 31st March Rs.14,22,000. Purchase of raw materials Rs.28,57,000, Sale of finished goods Rs.1,34,00,000, Direct wages Rs.37,50,000, Factory expenses Rs.21,25,000, Office and administration expenses Rs.10,34,000, Selling and distribution expenses Rs.7,50,000, Sale of scrap Rs.26,000. You are required to COMPUTE:
Q3(a)Economic order quantity, inventory management
10 marks hard
A company manufactures a product from raw material purchased at Rs.180 per kg. Handling cost is Rs.1,460 plus freight of Rs.940 per order. Incremental carrying cost of inventory is Rs.2.5 per kg per month. Cost of working capital finance on inventory investment is Rs.18 per kg per annum. Annual production is 1,00,000 units and 2.5 units are obtained from one kg of raw material. Assume 360 days in a year. Required:
Q3(b)Process costing, normal wastage, scrap accounting
10 marks hard
G K Ltd. produces product 'XYZ' which passes through Process-A and Process-B. Year ending 31st March 2020: Process A: 40,000 units introduced at cost Rs. 3,60,000, Material consumed Rs. 2,42,000, Direct wages Rs. 2,58,000, Manufacturing expenses Rs. 1,96,000, Output 37,000 units, Normal wastage 5%, Scrap value Rs. 15 per unit, Selling price Rs. 37 per unit. Process B: Material consumed Rs. 2,25,000, Direct wages Rs. 1,90,000, Manufacturing expenses Rs. 1,23,720, Output 27,000 units, Normal wastage 10%, Scrap value Rs. 20 per unit, Selling price Rs. 61 per unit. Additional info: 80% of Process-A output passed to next process, balance sold; entire Process-B output sold; Indirect expenses Rs. 4,48,080; neither process is a responsibility centre. Required:
Q4(a)Reconciliation of financial and cost accounts
10 marks hard
The Trading and Profit and Loss Account of a company for the year ended 31-03-2020 shows: To Materials Rs.26,80,000, Wages Rs.17,80,000, Factory expenses Rs.9,50,000, General administrative expenses Rs.4,80,200, Selling Expenses Rs.2,50,000, Preliminary expenses written off Rs.70,000, Net profit Rs.2,19,800. By Sales (50,000 units) Rs.62,00,000, Closing stock (2,000 units) Rs.1,50,000, Dividend received Rs.80,000. In Cost Accounts: Factory expenses allocated to production at 20% of Prime Cost; General administrative expenses absorbed at 10% of factory cost; Selling expenses charged at Rs.10 per unit sold. Required: PREPARE the Costing Profit and Loss Account and RECONCILE the Profit/Loss with the profit shown in the Financial Accounts.
Q4(b)Marginal costing, budgeting
10 marks hard
During FY 2019-20, GP Limited produced 30,000 units at 50% capacity. Cost structure at 50% level: Direct Material Rs.150/unit, Direct Wages Rs.50/unit, Variable Overheads Rs.50/unit, Direct Expenses Rs.30/unit, Factory Expenses (25% fixed) Rs.40/unit, Selling and Distribution Exp. (80% variable) Rs.20/unit, Office and Administrative Exp. (100% fixed) Rs.10/unit. For FY 2020-21: variable costs increase by 10%, fixed costs increase by 15%, selling price remains Rs.400 per unit. Required:
Q5(a)Hotel costing, tariff determination
10 marks hard
KR Resorts (P) Ltd. offers three types of rooms: Deluxe Room (100 rooms, 90% occupancy), Super Deluxe Room (60 rooms, 75% occupancy), Luxury Suite (40 rooms, 60% occupancy). Rent: Super deluxe is 2 times deluxe, luxury suite is 3 times deluxe. Annual expenses: Staff salaries Rs.780.00 lakhs, Lighting/Heating/Power Rs.350.00 lakhs, Repairs/Maintenance/Renovation Rs.220.00 lakhs, Linen Rs.60.00 lakhs, Laundry charges Rs.34.00 lakhs, Interior decoration Rs.85.00 lakhs, Sundries Rs.36.28 lakhs. Attendant wage Rs.500 per day per occupied room. Depreciation: Building 5% on Rs.900 lakhs, Furniture/Fixtures 10% on Rs.90 lakhs, Air conditioners 10% on Rs.75 lakhs. Profit to be provided at 25% on total taking. Assume 360 days per year. You are required to DETERMINE the tariff to be charged for different types of rooms.
Q5(b)(i)Journal entries, cost accounting, overhead absorption
5 marks medium
SHOW Journal entries for the following transactions assuming cost and financial accounts are integrated: (1) Materials issued: Direct Rs. 6,50,000, Indirect (to factory) Rs. 2,30,000; (2) Allocation of wages (25% indirect) Rs. 9,00,000; (3) Under/Over absorbed overheads: Factory (Over) Rs. 60,000, Administration (Under) Rs. 50,000; (4) Payment to Creditors (Trade payables) Rs. 9,00,000; (5) Collection from Debtors (Trade receivables) Rs. 8,00,000.
Q5(b)(ii)Opportunity cost, product decision making
5 marks medium
A company can make any one of 3 products X, Y, or Z in a year. It can exercise its option only at the beginning of each year. Relevant information: Product X (Selling Price Rs.100/unit, Variable Costs Rs.60/unit, Market Demand 3,000 units, Production Capacity 2,000 units); Product Y (Selling Price Rs.120/unit, Variable Costs Rs.90/unit, Market Demand 2,000 units, Production Capacity 3,000 units); Product Z (Selling Price Rs.120/unit, Variable Costs Rs.70/unit, Market Demand 1,000 units, Production Capacity 900 units). Fixed Costs Rs.3,00,000. Required: COMPUTE the opportunity costs for each of the products.
Q6(a)Idle time, overtime wages, labour cost accounting
5 marks medium
DISCUSS the accounting treatment of Idle time and overtime wages.
Q6(b)Zero-based budgeting, budgeting process
5 marks medium
EXPLAIN the stages in Zero-based budgeting.
Q6(c)Job costing, batch costing, costing methods
5 marks medium
STATE the differences between Job costing and Batch costing.
Q6(d)By-product costing, joint product accounting
5 marks medium
EXPLAIN the treatment of by-product cost in cost accounting.